PLPC 10-Q
Preformed Line Products Co (PLPC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal quarter ended
or
for the Transition Period From ________To _______
Commission file number
(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Office) |
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(Zip Code) |
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(Registrant's telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller Reporting Company |
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Emerging Growth Company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding as of July 19, 2024:
Table of Contents
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Item 1. |
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3 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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25 |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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27 |
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28 |
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2
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PREFORMED LINE PRODUCTS COMPANY
CONSOLIDATED BALANCE SHEETS
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June 30, 2024 |
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December 31, 2023 |
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(Thousands of dollars, except share and per share data) |
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(Unaudited) |
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ASSETS |
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Cash, cash equivalents and restricted cash |
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$ |
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$ |
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Accounts receivable, net |
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Inventories, net |
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Prepaid expenses |
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Other current assets |
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TOTAL CURRENT ASSETS |
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Property, plant and equipment, net |
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Operating lease, right-of-use assets |
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Goodwill |
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Other intangible assets, net |
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Deferred income taxes |
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Other assets |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Trade accounts payable |
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$ |
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$ |
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Notes payable to banks |
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Operating lease liabilities, current |
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Current portion of long-term debt |
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Accrued compensation and other benefits |
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Accrued expenses and other liabilities |
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Dividends payable |
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Income taxes payable |
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TOTAL CURRENT LIABILITIES |
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Long-term debt, less current portion |
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Operating lease liabilities, noncurrent |
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Deferred income taxes |
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Other noncurrent liabilities |
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SHAREHOLDERS' EQUITY |
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Common shares – $ |
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Common shares issued to rabbi trust, |
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Deferred compensation liability |
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Paid-in capital |
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Retained earnings |
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Treasury shares, at cost, |
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Accumulated other comprehensive loss |
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TOTAL PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS' EQUITY |
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Noncontrolling interest |
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TOTAL SHAREHOLDERS' EQUITY |
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
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$ |
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$ |
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See notes to consolidated financial statements (unaudited).
3
PREFORMED LINE PRODUCTS COMPANY
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(Thousands of dollars, except per share data) |
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Net sales |
$ |
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$ |
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$ |
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$ |
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Cost of products sold |
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GROSS PROFIT |
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Costs and expenses |
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Selling |
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General and administrative |
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Research and engineering |
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Other operating expense (income), net |
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OPERATING INCOME |
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Other income (expense) |
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Interest income |
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Interest expense |
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Other income, net |
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INCOME BEFORE INCOME TAXES |
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Income tax expense |
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NET INCOME |
$ |
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$ |
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$ |
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$ |
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Net income attributable to noncontrolling interests |
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NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS |
$ |
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$ |
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$ |
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$ |
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AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING: |
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Basic |
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Diluted |
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EARNINGS PER SHARE OF COMMON STOCK ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS: |
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Basic |
$ |
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$ |
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$ |
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$ |
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Diluted |
$ |
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$ |
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$ |
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$ |
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See notes to consolidated financial statements (unaudited).
4
PREFORMED LINE PRODUCTS COMPANY
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
(UNAUDITED)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(Thousands of dollars) |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive (loss) income, net of tax: |
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Foreign currency translation adjustment |
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Recognized net actuarial gain |
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Other comprehensive (loss) income, net of tax |
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( |
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Comprehensive income attributable to noncontrolling interests |
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( |
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( |
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COMPREHENSIVE INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS |
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$ |
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$ |
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$ |
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$ |
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See notes to consolidated financial statements (unaudited).
5
PREFORMED LINE PRODUCTS COMPANY
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
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Six Months Ended June 30, |
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2024 |
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2023 |
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(Thousands of dollars) |
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OPERATING ACTIVITIES |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by (used in) operations: |
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Depreciation and amortization |
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Deferred income taxes |
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Share-based compensation expense |
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(Gain) loss on sale of property and equipment |
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Other, net |
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Changes in operating assets and liabilities |
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NET CASH PROVIDED BY OPERATING ACTIVITIES |
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INVESTING ACTIVITIES |
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Capital expenditures |
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Proceeds from the sale of property and equipment |
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Acquisition of businesses, net of cash |
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NET CASH USED IN INVESTING ACTIVITIES |
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FINANCING ACTIVITIES |
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Proceeds (payments) of notes payable to banks |
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Proceeds from long-term debt |
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Payments of long-term debt |
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Dividends paid |
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Proceeds from issuance of common shares |
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Purchase of common shares for treasury |
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Purchase of common shares for treasury from related parties |
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Other |
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NET CASH USED IN FINANCING ACTIVITIES |
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( |
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Effects of exchange rate changes on cash, cash equivalents and restricted cash |
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( |
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Net decrease in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash at beginning of year |
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD |
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$ |
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$ |
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See notes to consolidated financial statements (unaudited).
6
PREFORMED LINE PRODUCTS COMPANY
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
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Accumulated Other |
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Common Shares |
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Common |
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Deferred |
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Paid in |
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Retained |
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Treasury |
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Cumulative |
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Unrecognized |
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Total Preformed Line Products Company Equity |
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Noncontrolling Interests |
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Total Equity |
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(In thousands, except share and per share data) |
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Balance at December 31, 2023 |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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Foreign currency translation |
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( |
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( |
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Pension adjustment, net of tax |
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Total comprehensive income |
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Share-based compensation |
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Purchase of |
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Issuance of |
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Common shares distributed from rabbi |
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— |
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— |
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Cash dividends declared – $ |
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( |
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( |
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( |
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Balance at March 31, 2024 |
$ |
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$ |
( |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Net income |
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Foreign currency translation |
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( |
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( |
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Pension adjustment, net of tax |
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Total comprehensive income |
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Share-based compensation |
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Purchase of |
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Issuance of |
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- |
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Common shares issued to rabbi |
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( |
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— |
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— |
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Cash dividends declared – $ |
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( |
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( |
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( |
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Balance at June 30, 2024 |
$ |
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$ |
( |
) |
$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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$ |
— |
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$ |
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|
|
|
Accumulated Other |
|
|
|
|
|
|
|
|||||||||||||
|
Common Shares |
|
Common |
|
Deferred |
|
Paid in |
|
Retained |
|
Treasury |
|
Cumulative |
|
Unrecognized |
|
Total Preformed Line Products Company Equity |
|
Noncontrolling Interests |
|
Total Equity |
|
|||||||||||
|
(In thousands, except share and per share data) |
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2022 |
$ |
|
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
( |
) |
$ |
|
||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Pension adjustment, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Purchase of |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
( |
) |
||||||||
Issuance of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common shares distributed from rabbi |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
||||||||
Cash dividends declared – $ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
||||||||
Balance at March 31, 2023 |
$ |
|
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
|||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
||||||||||
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Pension adjustment, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
||||||||||
Share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Purchase of |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
( |
) |
||||||||
Issuance of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common shares distributed from rabbi |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
||||||||
Cash dividends declared – $ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
||||||||
Balance at June 30, 2023 |
$ |
|
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
|||||||
See notes to consolidated financial statements (unaudited).
7
PREFORMED LINE PRODUCTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Tables in thousands of dollars, except share and per share data, unless specifically noted)
Note 1 – Significant Accounting Policies
The accompanying unaudited consolidated financial statements of Preformed Line Products Company and subsidiaries (the “Company” or “PLPC”) have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. This Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Form 10-K for the year ended December 31, 2023 filed on March 8, 2024 with the Securities and Exchange Commission. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.
The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from these estimates. In the opinion of management, these consolidated financial statements contain all estimates and adjustments, consisting of normal recurring accruals, required to fairly present the financial position, results of operations, and cash flows for the interim periods. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full-year ending December 31, 2024.
Noncontrolling interests are presented in the Company’s consolidated financial statements as if parent company investors (controlling interests) and other minority investors (noncontrolling interests) in partially-owned subsidiaries have similar economic interests in a single entity. As a result, investments in noncontrolling interests are reported as equity in the Company’s consolidated financial statements. Additionally, the Company’s consolidated financial statements include
Certain prior year amounts have been reclassified to conform to the current year presentation.
Recently Adopted or Issued Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU enhances reportable segment disclosures on both an annual and interim basis primarily in regards to the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within the reported measure(s) of segment profit or loss. In addition, the ASU requires disclosure, by segment, of other items included in the reported measure(s) of segment profit or loss, including qualitative information describing the composition, nature and type of each item. The ASU also expands disclosure requirements related to the CODM, including how the reported measure(s) of segment profit or loss are used to assess segment performance and allocate resources, the method used to allocate overhead for significant segment expenses and others. Lastly, all current required annual segment reporting disclosures under Topic 280 are now effective for interim periods. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this ASU.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU enhances income tax disclosures by providing information to better assess how an entity's operations, related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This ASU requires additional disclosures to the annual effective tax rate reconciliation including specific categories and further disaggregated reconciling items that meet the quantitative threshold. Additionally, the ASU requires disclosures relating to income tax expense and payments made to federal, state, local and foreign jurisdictions. This ASU is effective for fiscal years and interim periods beginning after December 15, 2024. The Company is evaluating the impact of adopting this ASU.
Note 2 – Revenue
Revenue Recognition
Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the
8
goods or services and is primarily based on shipping terms. Sales are measured as the amount of consideration the Company expects to receive in exchange for transferring products.
Disaggregated Revenue
The Company’s revenues by segment and product type are as follows:
|
|
Three Months Ended June 30, 2024 |
||||
Product Type |
|
PLP-USA |
The Americas |
EMEA |
Asia-Pacific |
Consolidated |
Energy |
|
|||||
Communications |
|
|||||
Special Industries |
|
|||||
Total |
|
|||||
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2023 |
||||
Product Type |
|
PLP-USA |
The Americas |
EMEA |
Asia-Pacific |
Consolidated |
Energy |
|
|||||
Communications |
|
|||||
Special Industries |
|
|||||
Total |
|
|||||
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2024 |
||||
Product Type |
|
PLP-USA |
The Americas |
EMEA |
Asia-Pacific |
Consolidated |
Energy |
|
|||||
Communications |
|
|||||
Special Industries |
|
|||||
Total |
|
|||||
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2023 |
||||
Product Type |
|
PLP-USA |
The Americas |
EMEA |
Asia-Pacific |
Consolidated |
Energy |
|
|||||
Communications |
|
|||||
Special Industries |
|
|||||
Total |
|
|||||
Credit Losses for Receivables
The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments. The Company uses a current expected credit loss model in order to immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments, mainly trade receivables. Additionally, the allowance is based upon identified delinquent accounts, customer payment patterns and other analyses of historical data trends. Receivable balances are written off against an allowance for credit losses after a final determination has been made.
|
|
Six Months Ended June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Allowance for credit losses, beginning of period |
|
$ |
|
|
$ |
|
||
(Reductions) additions charged to costs and expenses |
|
|
( |
) |
|
|
|
|
Write-offs |
|
|
( |
) |
|
|
( |
) |
Foreign exchange and other |
|
|
( |
) |
|
|
|
|
Allowance for credit losses, end of period |
|
$ |
|
|
$ |
|
||
9
Note 3 – Inventories, Net
Inventories, net
Inventory is carried at lower of cost or net realizable value.
|
|
|
|
|
|||||
|
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||
Raw materials |
|
|
$ |
|
|
$ |
|
||
Work-in-process |
|
|
|
|
|
|
|
||
Finished products |
|
|
|
|
|
|
|
||
Inventories, net of excess and obsolete inventory reserve |
|
|
|
|
|
|
|
||
Excess of current cost over LIFO cost |
|
|
|
( |
) |
|
|
( |
) |
Inventories at LIFO cost |
|
|
$ |
|
|
$ |
|
||
Costs for inventories of certain material, mainly in the U.S., are determined using the Last-In First-Out ("LIFO") method and totaled approximately $
Note 4 – Property and Equipment, Net
Major classes of property, plant and equipment are stated at cost and were as follows:
|
|
|
|
|
|
|
|
||
|
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||
Land and improvements |
|
|
$ |
|
|
$ |
|
||
Buildings and improvements |
|
|
|
|
|
|
|
||
Machinery, equipment and aircraft |
|
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
|
||
Property, plant and equipment, gross |
|
|
|
|
|
|
|
||
Less accumulated depreciation |
|
|
|
( |
) |
|
|
( |
) |
Property, plant and equipment, net |
|
|
$ |
|
|
$ |
|
||
Note 5 – Contingent Liabilities
The Company can be party to a variety of pending legal proceedings and claims arising in the normal course of business, including, but not limited to, litigation relating to employment, workers’ compensation, product liability, environmental and intellectual property. The Company has liability insurance to cover many of these claims.
Although the outcomes of these matters are not predictable with certainty, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the event the Company determines that a loss is not probable, but is reasonably possible, and the likelihood to develop what the Company believes to be a reasonable range of potential loss exists, the Company will include disclosure related to such matters. To the extent that there is a reasonable possibility the losses could exceed amounts already accrued, the Company will adjust the accrual in the period in which the determination is made, disclose an estimate of the additional loss or range of loss and if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.
In November 2016, the Company and its subsidiaries Helix Uniformed Ltd. (“Helix”) and Preformed Line Products (Canada) Limited (“PLPC Canada”), were each named, jointly and severally, with each of SNC-Lavalin ATP, Inc. (“SNC ATP”), HD Supply Canada Inc., by its trade names HD Supply Power Solutions and HD Supply Utilities (“HD Supply”), and Anixter Power Solutions Canada Inc. (the corporate successor to HD Supply, “Anixter”) and, together with the Company, PLPC Canada, Helix, SNC ATP and HD Supply (the
10
“Defendants”), in a complaint filed by Altalink, L.P. (the “Plaintiff”) in the Court of Queen’s Bench of Alberta in Alberta, Canada in
The Complaint stated that the Plaintiff engaged SNC ATP to design, engineer, procure and construct numerous power distribution and transmission facilities in Alberta (the “Projects”) and that through SNC ATP and HD Supply (now Anixter), spacer dampers manufactured by Helix were procured and installed in the Projects. The Complaint alleged that the spacer dampers have and may continue to become loose, open and detach from the conductors, resulting in damage and potential injury and a failure to perform the intended function of providing spacing and damping to the Projects. The Plaintiff was seeking an estimated $
On September 26, 2023, the Defendants and the Plaintiff entered into a settlement agreement which dismissed the action against all Defendants with prejudice. Net of insurance, the total settlement amount paid by the Company in the fourth quarter of 2023 was $
The Company is not a party to any pending legal proceedings that the Company believes would, individually or in the aggregate, have a material adverse effect on its financial condition, results of operations or cash flow. As of June 30, 2024 and December 31, 2023, there were
Note 6 – Pension Plans
The Company uses a December 31 measurement date for the Preformed Line Products Company Employees’ Retirement Plan (the “U.S. Plan”).
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Interest cost |
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
Expected return on plan assets |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Recognized net actuarial loss |
|
|
|
|
|
|
|
|
|
|
|
||||
Net periodic pension expense |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
There were
11
Note 7 – Accumulated Other Comprehensive Income (“AOCI”)
The following tables set forth the total changes in AOCI by component, net of tax:
|
|
Three Months Ended June 30, 2024 |
|
|
Three Months Ended June 30, 2023 |
|
||||||||||||||||||
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
||||||
|
|
Unrecognized |
|
|
Translation |
|
|
|
|
|
Unrecognized |
|
|
Translation |
|
|
|
|
||||||
|
|
Benefit Cost |
|
|
Adjustment |
|
|
Total |
|
|
Benefit Cost |
|
|
Adjustment |
|
|
Total |
|
||||||
Balance at April 1 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income before reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amounts reclassified from AOCI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortization of defined benefit pension actuarial gain (a) |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Net current period other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Balance at June 30 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Six Months Ended June 30, 2024 |
|
|
Six Months Ended June 30, 2023 |
|
||||||||||||||||||
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
||||||
|
|
Unrecognized |
|
|
Translation |
|
|
|
|
|
Unrecognized |
|
|
Translation |
|
|
|
|
||||||
|
|
Benefit Cost |
|
|
Adjustment |
|
|
Total |
|
|
Benefit Cost |
|
|
Adjustment |
|
|
Total |
|
||||||
Balance at January 1 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income before reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amounts reclassified from AOCI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortization of defined benefit pension actuarial gain (a) |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Net current period other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Balance at June 30 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Note 8 – Debt and Credit Arrangements
The Company maintains a credit facility (the "Facility") with a capacity of $
On January 19, 2021, the Company received funding for a term loan from PNC Equipment Finance, LLC in the principal amount of $
The Company has other borrowing facilities at certain of its foreign subsidiaries, which consist of overdraft lines, working capital credit lines, and facilities for the issuance of letters of credit and short-term borrowing needs. At June 30, 2024, and December 31, 2023, $
The Company's Asia-Pacific segment had $
12
Note 9 – Income Taxes
For the three-month period ended June 30, 2024 and 2023, the Company’s effective tax rate was
For the six-month period ended June 30, 2024 and 2023, the Company’s effective tax rate was
The Company provides valuation allowances against deferred tax assets when it is more likely than not that some portion or all of its deferred tax assets will not be realized. During the period ended June 30, 2024, the Company did
For the six-month periods ending June 30, 2024 and 2023, the Company did
Note 10 – Computation of Earnings Per Share
Basic earnings per share were computed by dividing net income by the weighted-average number of common shares outstanding for each respective period. Diluted earnings per share were calculated by dividing net income by the weighted-average of all potentially dilutive common shares that were outstanding during the periods presented.
The calculation of basic and diluted earnings per share for the three and six months ended June 30, was as follows:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Numerator |
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator |
|
|
|
|
|
|
|
|
|
|
|
||||
Determination of shares (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect – share-based awards |
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
For the three months ended June 30, 2024 and 2023, there were
13
Note 11 – Goodwill and Other Intangibles
The Company’s finite and indefinite-lived intangible assets consist of the following:
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Gross Carrying |
|
|
Accumulated |
|
||||
|
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Amortization |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Patents |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Land use rights |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Trademark |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Technology |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Customer relationships |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Indefinite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill |
|
$ |
|
|
|
|
|
$ |
|
|
|
|
||||
The Company’s measurement date for its annual impairment test for goodwill is October 1st of each year. The Company performs additional interim impairment assessments as circumstances warrant. There were no indicators of impairment noted for the period ending June 30, 2024.
The Company may use both quantitative and qualitative approaches when testing goodwill for impairment. For selected reporting units where the qualitative approach is utilized, a qualitative evaluation of events and circumstances impacting the reporting unit is performed to determine if it is more likely than not that the fair value of the reporting unit exceeds its carrying amount. If that determination is made, no further evaluation is necessary. Otherwise, the Company performs a quantitative impairment test on the reporting unit.
For the quantitative approach, the Company uses a combination of the income approach, which uses a discounted cash flow methodology, and the market approach, which uses comparable market multiples in computing fair value by reporting unit. The Company then compares the fair value of the reporting unit with its carrying value to assess if goodwill has been impaired. The fair value estimates are subjective and sensitive to significant assumptions, such as revenue growth rates, operating margins, the weighted average cost of capital, and estimated market multiples, of which are affected by expectations of future market or economic conditions. The Company believes that the methodologies, significant assumptions, and weightings used are reasonable and result in appropriate fair values of the reporting units.
The Company’s only intangible asset with an indefinite life is goodwill. The Company’s goodwill is not deductible for tax purposes.
|
|
PLP-USA |
|
|
The Americas |
|
|
EMEA |
|
|
Asia-Pacific |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at January 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Currency translation |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Balance at June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Note 12 – Fair Value of Financial Assets and Liabilities
Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. The Company measures and records certain assets and liabilities at fair value. A fair value hierarchy is used for those assets and liabilities measured at fair value that distinguishes between assumptions based on market data (observable inputs), and the Company’s assumptions (unobservable inputs). The hierarchy consists of the following three levels: (Level 1 Inputs) quoted market prices in active markets for identical assets or liabilities; (Level 2 Inputs) observable market-based inputs or unobservable inputs that are corroborated by market data; and (Level 3 Inputs) unobservable inputs that are not corroborated by market data.
The following table summarizes the Company’s assets and liabilities, recorded and measured at fair value, in the Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023:
14
Description |
|
Balance as of |
|
|
Quoted Prices in Active Markets for Identical Assets or Liabilities |
|
|
Significant Other Observable Inputs |
|
|
Significant Unobservable Inputs |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Supplemental profit sharing plan |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Description |
|
Balance as of December 31, 2023 |
|
|
Quoted Prices in Active Markets for Identical Assets or Liabilities |
|
|
Significant Other Observable Inputs |
|
|
Significant Unobservable Inputs |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Supplemental profit sharing plan |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company operates internationally and enters into intercompany transactions denominated in foreign currencies. Consequently, the Company is subject to market risk arising from exchange rate movements between the dates foreign currency transactions occur and the dates they are settled. The Company currently uses foreign currency forward contracts to reduce the risk related to some of these transactions. These contracts usually have maturities of
The Company has a non-qualified supplemental profit sharing plan for its executives (the "Supplemental Profit Sharing Plan"). The liability for the unfunded Supplemental Profit Sharing Plan was $
The carrying value of the Company’s current financial instruments, which include cash, cash equivalents and restricted cash, accounts receivable, accounts payable and short-term debt, approximates fair value because of the short-term maturity of these instruments.
At June 30, 2024 and December 31, 2023, the fair value of the Company’s long-term debt was estimated using discounted cash flows analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements that are considered to be Level 2 inputs.
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
|
||||
Long-term debt and related current maturities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
Note 13 – Segment Information
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated by the CODM, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance.
The following tables present a summary of the Company’s reportable operating segments for the three and six months ended June 30, 2024 and 2023. Financial results for the PLP-USA segment include the elimination of all segments’ intercompany profit in inventory.
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2024 |
|
|
2023 |
|
2024 |
|
|
2023 |
|
||||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PLP-USA |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
The Americas |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia-Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net sales |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Intersegment sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PLP-USA |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
The Americas |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia-Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total intersegment sales |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PLP-USA |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
The Americas |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia-Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total gross profit |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Preformed Line Products Company shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PLP-USA |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
The Americas |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia-Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net income attributable to Preformed Line Products Company shareholders |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
Note 14 – Acquisitions of Businesses
Acquisition of Pilot Plastics
On February 1, 2023, the Company acquired substantially all of the assets of Pilot Plastics, headquartered in Akron, Ohio. Pilot Plastics is an injection molding manufacturer and the acquisition expanded the Company's injection molding capabilities and further enhanced the Company's domestic manufacturing footprint. The purchase price was approximately $
The acquisition of Pilot Plastics is accounted for using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recognized at their respective fair values on the acquisition date. The process of estimating the fair values of certain tangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates.
16
|
|
Final Allocation |
|
|
Accounts receivable |
|
$ |
|
|
Inventory |
|
|
||
Property, plant and equipment and other assets |
|
|
|
|
Accounts payable |
|
|
( |
) |
Other current liabilities |
|
|
( |
) |
Total identifiable net assets |
|
|
|
|
Total consideration, net of cash received |
|
$ |
|
|
Due to the consideration transferred equaling the fair value of the assets acquired, no residual goodwill was recognized.
All measurement period adjustments were completed within a year from the acquisition date, and such adjustments did not have a material impact on the Company's results of operations and financial position.
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the readers of our financial statements better understand our results of operations, financial condition and present business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and related notes included elsewhere in this report.
OVERVIEW
Preformed Line Products Company (the “Company”, “PLPC”, “we”, “us”, or “our”) was incorporated in Ohio in 1947. We are an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information (data communication), and other similar industries. Our primary products support, protect, connect, terminate, and secure cables and wires. We provide helical solutions, connectors, fiber optic and copper splice closures, solar hardware mounting applications, and electric vehicle charging station foundations. We also provide aerial drone inspection services for utility assets including transmission and distribution power lines, substations, and generation facilities. We are respected around the world for quality, dependability and market-leading customer service. Our goal is to continue to achieve profitable growth as a leader in the research, innovation, development, manufacture, and marketing of technically advanced products and services related to energy, communications and cable systems and to take advantage of this leadership position to sell additional quality products in familiar markets. We have sales and manufacturing operations in 20 different countries.
We report our segments in four geographic regions: PLP-USA (including corporate), The Americas (includes operations in North and South America, excluding PLP-USA), EMEA (Europe, Middle East & Africa) and Asia-Pacific, in accordance with accounting standards codified in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 280, “Segment Reporting”. Each segment distributes a full range of our primary products. Our PLP-USA segment is comprised of our U.S. operations manufacturing our traditional products primarily supporting our domestic energy, telecommunications, solar framing products and inspection services. Our other three segments, The Americas, EMEA and Asia-Pacific, support our energy, telecommunications, data communication, solar and other products in each respective geographical region.
The segment managers responsible for each region report directly to the Company’s Executive Chairman, who is the chief operating decision maker, and are accountable for the financial results and performance of their entire segment for which they are responsible. The business components within each segment are managed to maximize the results of the entire operating segment and the Company rather than the results of any individual business component of the segment.
We evaluate segment performance and allocate resources based on several factors primarily based on sales and net income.
PREFACE
The following discussion describes our results of operations for the three and six months ended June 30, 2024 and 2023. Our consolidated financial statements are prepared in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP"). Our discussions of the financial results include non-GAAP measures (e.g., foreign currency impact) to provide additional information concerning our financial results and provide information that we believe is useful to the readers of our financial statements in the assessment of our performance and operating trends.
Net sales of $138.7 million decreased $43.1 million for the three months ended June 30, 2024 year-over-year and net sales of $279.6 million decreased $84.0 million for the six months ended June 30, 2024 year-over-year, mainly due to the elevated inventory levels at PLP-USA communications markets' customers and distributors. The inflationary headwinds we experienced in 2022 and early 2023 related to raw materials, specifically plastic resins, aluminum and sand (grit), have generally subsided. Costs related to shipping and freight have similarly fallen from their 2022 peak. Decreases in these underlying costs along with the impacts of our previous price increases benefited gross margins in 2023 and have not meaningfully impacted the results for the second quarter or six months ended June 30, 2024. If inflationary pressures increase again, it may require further price adjustments to maintain profit margin, and any price increases may have a negative effect on demand.
Our financial statements are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. The fluctuations of foreign currencies during the three and six months ended June 30, 2024 had a unfavorable impact on net sales of $1.1 million and $0.3 million, respectively. The fluctuations on foreign currencies during the three and six months ended June 30, 2024 had a de minimis impact on net income. The fluctuations of foreign currencies during the three and six months ended June 30, 2023 had an unfavorable impact on net sales of $2.5 million and $7.1 million, respectively. The fluctuations on foreign currencies during the three and six months ended June 30, 2023 had an unfavorable impact on net income of $0.4 million and $0.6 million, respectively. On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the three and six months ended June 30, 2024, was as follows:
18
|
|
Foreign Currency Translation Impact |
|
|||||||||||||
|
|
Three Months Ended June 30, 2024 |
|
|
Six Months Ended June 30, 2024 |
|
||||||||||
(Thousands of dollars) |
|
Net Sales |
|
|
Net Income |
|
|
Net Sales |
|
|
Net Income |
|
||||
The Americas |
|
$ |
(420 |
) |
|
$ |
(39 |
) |
|
$ |
385 |
|
|
$ |
(5 |
) |
EMEA |
|
|
58 |
|
|
|
37 |
|
|
|
846 |
|
|
|
76 |
|
Asia-Pacific |
|
|
(705 |
) |
|
|
(40 |
) |
|
|
(1,549 |
) |
|
|
(114 |
) |
Total |
|
$ |
(1,067 |
) |
|
$ |
(42 |
) |
|
$ |
(318 |
) |
|
$ |
(43 |
) |
Although elevated inventory levels in the PLP-USA communications markets and other market headwinds have impacted our first half 2024 results, we believe our business portfolio and our financial position are sound and strategically well-positioned. We remain focused on assessing our global market opportunities and overall manufacturing capacity in conjunction with the requirements of local manufacturing in the markets that we serve. As necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, increase sales volume and deliver value to our customers. Period cost containment has been a priority for the Company in 2024, shown through a reduction in costs and expenses of 13% for the six months ended June 30, 2024. We have continued to invest in the business to expand into new markets for the Company, evaluate strategic mergers and acquisitions, improve efficiency, develop new products and increase our capacity. As of June 30, 2024, our liquidity remains strong with our bank debt to equity percentage at 9.2%. We can borrow needed funds at a competitive interest rate under the Facility.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2024 COMPARED TO THREE MONTHS ENDED JUNE 30, 2023
The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the three months ended June 30, 2024 and 2023. The Company’s past operating results are not necessarily indicative of future operating results.
|
|
Three Months Ended June 30, |
|
|||||||||||||||||
(Thousands of dollars) |
|
2024 |
|
|
|
2023 |
|
|
|
Change |
|
|||||||||
Net sales |
|
$ |
138,720 |
|
|
100.0 |
|
% |
|
$ |
181,813 |
|
|
100.0 |
|
% |
|
$ |
(43,093 |
) |
Cost of products sold |
|
|
94,447 |
|
|
68.1 |
|
|
|
|
115,486 |
|
|
63.5 |
|
|
|
|
(21,039 |
) |
GROSS PROFIT |
|
|
44,273 |
|
|
31.9 |
|
|
|
|
66,327 |
|
|
36.5 |
|
|
|
|
(22,054 |
) |
Costs and expenses |
|
|
32,981 |
|
|
23.8 |
|
|
|
|
38,179 |
|
|
21.0 |
|
|
|
|
(5,198 |
) |
OPERATING INCOME |
|
|
11,292 |
|
|
8.1 |
|
|
|
|
28,148 |
|
|
15.5 |
|
|
|
|
(16,856 |
) |
Other expense, net |
|
|
(131 |
) |
|
(0.1 |
) |
|
|
|
(607 |
) |
|
(0.3 |
) |
|
|
|
476 |
|
INCOME BEFORE INCOME TAXES |
|
|
11,161 |
|
|
8.0 |
|
|
|
|
27,541 |
|
|
15.1 |
|
|
|
|
(16,380 |
) |
Income taxes |
|
|
1,794 |
|
|
1.3 |
|
|
|
|
7,077 |
|
|
3.9 |
|
|
|
|
(5,283 |
) |
NET INCOME |
|
|
9,367 |
|
|
6.8 |
|
|
|
|
20,464 |
|
|
11.3 |
|
|
|
|
(11,097 |
) |
Net (income) loss attributable to noncontrolling interests |
|
|
(1 |
) |
|
(0.0 |
) |
|
|
|
8 |
|
|
0.0 |
|
|
|
|
(9 |
) |
NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS |
|
$ |
9,366 |
|
|
6.8 |
|
% |
|
$ |
20,472 |
|
|
11.3 |
|
% |
|
$ |
(11,106 |
) |
Net sales. In 2024, net sales were $138.7 million, a decrease of $43.1 million, or 24%, compared to 2023. Excluding the effect of currency translation, net sales decreased 23% as summarized in the following table:
|
|
Three Months Ended June 30, |
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
||||||
(Thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
Due to |
|
|
Excluding |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
Currency |
|
|
% |
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Translation |
|
|
Translation |
|
|
Change |
|
|
||||||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PLP-USA |
|
$ |
59,900 |
|
|
$ |
96,977 |
|
|
$ |
(37,077 |
) |
|
$ |
— |
|
|
$ |
(37,077 |
) |
|
|
(38 |
) |
% |
The Americas |
|
|
21,815 |
|
|
|
21,494 |
|
|
|
321 |
|
|
|
(420 |
) |
|
|
741 |
|
|
|
3 |
|
|
EMEA |
|
|
32,039 |
|
|
|
37,306 |
|
|
|
(5,267 |
) |
|
|
58 |
|
|
|
(5,325 |
) |
|
|
(14 |
) |
|
Asia-Pacific |
|
|
24,966 |
|
|
|
26,036 |
|
|
|
(1,070 |
) |
|
|
(705 |
) |
|
|
(365 |
) |
|
|
(1 |
) |
|
Consolidated |
|
$ |
138,720 |
|
|
$ |
181,813 |
|
|
$ |
(43,093 |
) |
|
$ |
(1,067 |
) |
|
$ |
(42,026 |
) |
|
|
(23 |
) |
% |
The decrease in PLP-USA net sales of $37.1 million, or 38%, was primarily due to lower volumes and unfavorable product mix in communications sales and energy product sales. International net sales for the three months ended June 30, 2024 were unfavorably affected by $1.1 million when local currencies were converted to U.S. dollars. The following discussion of changes in net sales excludes the effect of currency translation. The Americas net sales of $21.8 million increased $0.7 million, or 3%, primarily due to higher volumes
19
in energy product sales. EMEA net sales of $32.0 million decreased $5.3 million, or 14%, primarily due to lower volume in communications sales. Asia-Pacific net sales of $25.0 million decreased $0.4 million, or 1%, primarily due to lower volumes in special industries.
Gross profit. Gross profit of $44.3 million for 2024 decreased $22.1 million, or 33%, compared to 2023. Excluding the effect of currency translation, gross profit decreased $21.8 million, or 33%, as summarized in the following table:
|
|
Three Months Ended June 30, |
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
||||||
(Thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
Due to |
|
|
Excluding |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
Currency |
|
|
% |
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Translation |
|
|
Translation |
|
|
Change |
|
|
||||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PLP-USA |
|
$ |
20,743 |
|
|
$ |
41,234 |
|
|
$ |
(20,492 |
) |
|
$ |
— |
|
|
$ |
(20,492 |
) |
|
|
(50 |
) |
% |
The Americas |
|
|
6,712 |
|
|
|
8,198 |
|
|
|
(1,485 |
) |
|
|
(128 |
) |
|
|
(1,357 |
) |
|
|
(17 |
) |
|
EMEA |
|
|
9,364 |
|
|
|
9,518 |
|
|
|
(154 |
) |
|
|
30 |
|
|
|
(184 |
) |
|
|
(2 |
) |
|
Asia-Pacific |
|
|
7,454 |
|
|
|
7,377 |
|
|
|
77 |
|
|
|
(204 |
) |
|
|
281 |
|
|
|
4 |
|
|
Consolidated |
|
$ |
44,273 |
|
|
$ |
66,327 |
|
|
$ |
(22,054 |
) |
|
$ |
(302 |
) |
|
$ |
(21,752 |
) |
|
|
(33 |
) |
% |
PLP-USA gross profit of $20.7 million decreased by $20.5 million, or 50%, compared to the same period in 2023, primarily due to lower sales volumes and unfavorable product mix. International gross profit for the period ended June 30, 2024 was unfavorably impacted by $0.3 million when local currencies were translated to U.S. dollars. The following discussion of gross profit changes excludes the effects of currency translation. The Americas gross profit decreased $1.4 million, or 17%, which was primarily the result of unfavorable product mix and higher manufacturing costs. EMEA gross profit decreased $0.2 million, or 2%, primarily due to lower sales volumes, partially offset by a reduction in warranty expense. Asia-Pacific gross profit increased $0.3 million, or 4%, which was primarily driven by favorable product mix.
Costs and expenses. Costs and expenses of $33.0 million for the three months ended June 30, 2024 decreased $5.2 million, or 14%, when compared to 2023. Excluding the effect of currency translation, costs and expenses decreased $4.9 million, or 13%, as summarized in the following table:
|
|
Three Months Ended June 30, |
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
||||||
(Thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
Due to |
|
|
Excluding |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
Currency |
|
|
% |
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Translation |
|
|
Translation |
|
|
Change |
|
|
||||||
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PLP-USA |
|
$ |
16,939 |
|
|
$ |
20,459 |
|
|
$ |
(3,520 |
) |
|
$ |
— |
|
|
$ |
(3,520 |
) |
|
|
(17 |
) |
% |
The Americas |
|
|
4,644 |
|
|
|
5,001 |
|
|
|
(357 |
) |
|
|
(81 |
) |
|
|
(276 |
) |
|
|
(6 |
) |
|
EMEA |
|
|
5,388 |
|
|
|
6,819 |
|
|
|
(1,431 |
) |
|
|
(18 |
) |
|
|
(1,413 |
) |
|
|
(21 |
) |
|
Asia-Pacific |
|
|
6,010 |
|
|
|
5,900 |
|
|
|
110 |
|
|
|
(158 |
) |
|
|
268 |
|
|
|
5 |
|
|
Consolidated |
|
$ |
32,981 |
|
|
$ |
38,179 |
|
|
$ |
(5,198 |
) |
|
$ |
(257 |
) |
|
$ |
(4,941 |
) |
|
|
(13 |
) |
% |
PLP-USA costs and expenses of $16.9 million decreased $3.5 million, or 17% year-over-year. PLP-USA’s decrease was primarily attributable to lower selling costs and lower personnel and professional services costs, primarily as a result of cost containment efforts. International costs and expenses for the three months ended June 30, 2024 were unfavorably impacted by $0.3 million when local currencies were translated to U.S. dollars. The following discussion of costs and expenses excludes the effect of currency translation. The Americas costs and expenses of $4.6 million decreased $0.3 million primarily due to lower selling, general, and administrative costs. EMEA costs and expenses of $5.4 million decreased by $1.4 million primarily due to elevated past-due receivable collections which reduced bad debt expenses. Asia-Pacific costs and expenses of $6.0 million increased $0.3 million due to the impact of foreign currency remeasurement.
Other expense, net. Other expense, net of $0.1 million for the three months ended June 30, 2024 was favorable by $0.5 million when compared to Other expense, net for the three months ended June 30, 2023 of $0.6 million. The favorable movement was due to lower interest expense from reduced debt balances and higher interest income earned on cash balances in certain international jurisdictions for the three months ended June 30, 2024.
Income taxes. Income taxes for the three months ended June 30, 2024 and 2023 were $1.8 million and $7.1 million based on pre-tax income of $11.2 million and $27.5 million, respectively. The tax rate for the three months ended June 30, 2024 and 2023 was 16% and 26%, respectively. The effective tax rate for the three months ended June 30, 2024 was lower than the effective tax rate for the same period in 2023 mainly due to discrete benefits recorded as a result of amending prior year federal tax returns.
Net income. As a result of the preceding items, net income for the three months ended June 30, 2024 was $9.4 million, compared to $20.5 million for 2023. Excluding the effect of currency translation, net income decreased $11.1 million as summarized in the following
20
table. The decrease in net income was due to decreases in operating income described above, partially offset by lower interest expense and lower tax expense:
|
|
Three Months Ended June 30, |
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
||||||
(Thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
Due to |
|
|
Excluding |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
Currency |
|
|
% |
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Translation |
|
|
Translation |
|
|
Change |
|
|
||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PLP-USA |
|
$ |
3,345 |
|
|
$ |
14,887 |
|
|
$ |
(11,542 |
) |
|
$ |
— |
|
|
$ |
(11,542 |
) |
|
|
(78 |
) |
% |
The Americas |
|
|
1,796 |
|
|
|
2,750 |
|
|
|
(954 |
) |
|
|
(39 |
) |
|
|
(915 |
) |
|
|
(33 |
) |
|
EMEA |
|
|
2,975 |
|
|
|
1,876 |
|
|
|
1,099 |
|
|
|
37 |
|
|
|
1,062 |
|
|
|
57 |
|
|
Asia-Pacific |
|
|
1,250 |
|
|
|
959 |
|
|
|
291 |
|
|
|
(40 |
) |
|
|
331 |
|
|
|
35 |
|
|
Consolidated |
|
$ |
9,366 |
|
|
$ |
20,472 |
|
|
$ |
(11,106 |
) |
|
$ |
(42 |
) |
|
$ |
(11,064 |
) |
|
|
(54 |
) |
% |
SIX MONTHS ENDED JUNE 30, 2024 COMPARED TO SIX MONTHS ENDED JUNE 30, 2023
The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the six months ended June 30, 2024 and 2023. The Company’s past operating results are not necessarily indicative of future operating results.
|
|
Six Months Ended June 30, |
|
|||||||||||||||||
(Thousands of dollars) |
|
2024 |
|
|
|
2023 |
|
|
|
Change |
|
|||||||||
Net sales |
|
$ |
279,625 |
|
|
100.0 |
|
% |
|
$ |
363,637 |
|
|
100.0 |
|
% |
|
$ |
(84,012 |
) |
Cost of products sold |
|
|
191,220 |
|
|
68.4 |
|
|
|
|
231,026 |
|
|
63.5 |
|
|
|
|
(39,806 |
) |
GROSS PROFIT |
|
|
88,405 |
|
|
31.6 |
|
|
|
|
132,611 |
|
|
36.5 |
|
|
|
|
(44,206 |
) |
Costs and expenses |
|
|
65,554 |
|
|
23.4 |
|
|
|
|
75,482 |
|
|
20.8 |
|
|
|
|
(9,928 |
) |
OPERATING INCOME |
|
|
22,851 |
|
|
8.2 |
|
|
|
|
57,129 |
|
|
15.7 |
|
|
|
|
(34,278 |
) |
Other income (expense), net |
|
|
168 |
|
|
0.1 |
|
|
|
|
(1,329 |
) |
|
(0.4 |
) |
|
|
|
1,497 |
|
INCOME BEFORE INCOME TAXES |
|
|
23,019 |
|
|
8.2 |
|
|
|
|
55,800 |
|
|
15.3 |
|
|
|
|
(32,781 |
) |
Income taxes |
|
|
4,049 |
|
|
1.4 |
|
|
|
|
13,917 |
|
|
3.8 |
|
|
|
|
(9,868 |
) |
NET INCOME |
|
|
18,970 |
|
|
6.8 |
|
|
|
|
41,883 |
|
|
11.5 |
|
|
|
|
(22,913 |
) |
Net income attributable to noncontrolling interests |
|
|
(8 |
) |
|
(0.0 |
) |
|
|
|
(13 |
) |
|
(0.0 |
) |
|
|
|
5 |
|
NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS |
|
$ |
18,962 |
|
|
6.8 |
|
% |
|
$ |
41,870 |
|
|
11.5 |
|
% |
|
$ |
(22,908 |
) |
Net sales. In 2024, net sales were $279.6 million, a decrease of $84.0 million, or 23%, compared to 2023. Excluding the effect of currency translation, net sales decreased 23% as summarized in the following table:
|
|
Six Months Ended June 30, |
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
||||||
(Thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
Due to |
|
|
Excluding |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
Currency |
|
|
% |
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Translation |
|
|
Translation |
|
|
Change |
|
|
||||||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PLP-USA |
|
$ |
130,637 |
|
|
$ |
194,155 |
|
|
$ |
(63,518 |
) |
|
$ |
— |
|
|
$ |
(63,518 |
) |
|
|
(33 |
) |
% |
The Americas |
|
|
40,173 |
|
|
|
44,061 |
|
|
|
(3,888 |
) |
|
|
385 |
|
|
|
(4,273 |
) |
|
|
(10 |
) |
|
EMEA |
|
|
60,693 |
|
|
|
76,340 |
|
|
|
(15,647 |
) |
|
|
846 |
|
|
|
(16,493 |
) |
|
|
(22 |
) |
|
Asia-Pacific |
|
|
48,122 |
|
|
|
49,081 |
|
|
|
(959 |
) |
|
|
(1,549 |
) |
|
|
590 |
|
|
|
1 |
|
|
Consolidated |
|
$ |
279,625 |
|
|
$ |
363,637 |
|
|
$ |
(84,012 |
) |
|
$ |
(318 |
) |
|
$ |
(83,694 |
) |
|
|
(23 |
) |
% |
The decrease in PLP-USA net sales of $63.5 million, or 33%, was primarily due to lower volumes and unfavorable product mix in communications sales and energy product sales. International net sales for the six months ended June 30, 2024 were unfavorably affected by $0.3 million when local currencies were converted to U.S. dollars. The following discussion of changes in net sales excludes the effect of currency translation. The Americas net sales of $40.2 million decreased $4.3 million, or 10%, primarily due to lower volumes in communications sales, partially offset by increased volumes in energy product sales. EMEA net sales of $60.7 million decreased $16.5 million, or 22%, primarily due to lower volume in communications sales, partially offset by increased volumes in energy product sales. Asia-Pacific net sales of $48.1 million increased $0.6 million, or 1%, primarily due to volume increases in energy product and special industries sales.
21
Gross profit. Gross profit of $88.4 million for 2024 decreased $44.2 million, or 33%, compared to 2023. Excluding the effect of currency translation, gross profit decreased $44.1 million, or 33%, as summarized in the following table:
|
|
Six Months Ended June 30, |
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
||||||
(Thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
Due to |
|
|
Excluding |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
Currency |
|
|
% |
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Translation |
|
|
Translation |
|
|
Change |
|
|
||||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PLP-USA |
|
$ |
45,439 |
|
|
$ |
83,341 |
|
|
$ |
(37,902 |
) |
|
$ |
— |
|
|
$ |
(37,902 |
) |
|
|
(45 |
) |
% |
The Americas |
|
|
11,678 |
|
|
|
16,185 |
|
|
|
(4,507 |
) |
|
|
125 |
|
|
|
(4,632 |
) |
|
|
(29 |
) |
|
EMEA |
|
|
17,682 |
|
|
|
18,765 |
|
|
|
(1,083 |
) |
|
|
209 |
|
|
|
(1,292 |
) |
|
|
(7 |
) |
|
Asia-Pacific |
|
|
13,606 |
|
|
|
14,320 |
|
|
|
(714 |
) |
|
|
(413 |
) |
|
|
(301 |
) |
|
|
(2 |
) |
|
Consolidated |
|
$ |
88,405 |
|
|
$ |
132,611 |
|
|
$ |
(44,206 |
) |
|
$ |
(79 |
) |
|
$ |
(44,127 |
) |
|
|
(33 |
) |
% |
PLP-USA gross profit of $45.4 million decreased by $37.9 million, or 45%, compared to the same period in 2023, primarily due to lower sales volumes and unfavorable product mix. International gross profit for the period ended June 30, 2024 was unfavorably impacted by $0.1 million when local currencies were translated to U.S. dollars. The following discussion of gross profit changes excludes the effects of currency translation. The Americas gross profit decreased $4.6 million, or 29%, which was primarily the result of lower sales volumes. EMEA gross profit decreased $1.3 million, or 7%, primarily due to lower sales volumes, partially offset by favorable resolution of a warranty claim. Asia-Pacific gross profit decreased $0.3 million, or 2%, which was primarily driven by higher manufacturing costs, partially offset by favorable product mix.
Costs and expenses. Costs and expenses of $65.6 million for the six months ended June 30, 2024 decreased $9.9 million, or 13%, when compared to 2023. Excluding the effect of currency translation, costs and expenses decreased $9.9 million, or 13%, as summarized in the following table:
|
|
Six Months Ended June 30, |
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
||||||
(Thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
Due to |
|
|
Excluding |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
Currency |
|
|
% |
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Translation |
|
|
Translation |
|
|
Change |
|
|
||||||
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PLP-USA |
|
$ |
35,103 |
|
|
$ |
40,365 |
|
|
$ |
(5,262 |
) |
|
$ |
— |
|
|
$ |
(5,262 |
) |
|
|
(13 |
) |
% |
The Americas |
|
|
9,364 |
|
|
|
10,458 |
|
|
|
(1,093 |
) |
|
|
174 |
|
|
|
(1,267 |
) |
|
|
(12 |
) |
|
EMEA |
|
|
11,518 |
|
|
|
13,512 |
|
|
|
(1,995 |
) |
|
|
99 |
|
|
|
(2,094 |
) |
|
|
(15 |
) |
|
Asia-Pacific |
|
|
9,569 |
|
|
|
11,147 |
|
|
|
(1,578 |
) |
|
|
(265 |
) |
|
|
(1,313 |
) |
|
|
(12 |
) |
|
Consolidated |
|
$ |
65,554 |
|
|
$ |
75,482 |
|
|
$ |
(9,928 |
) |
|
$ |
8 |
|
|
$ |
(9,936 |
) |
|
|
(13 |
) |
% |
PLP-USA costs and expenses of $35.1 million decreased $5.3 million, or 13% year-over-year. PLP-USA’s decrease was primarily attributable to lower selling costs and lower personnel and professional services costs, primarily as a result of cost containment efforts. International costs and expenses for the six months ended June 30, 2024 had a de minimis impact when local currencies were translated to U.S. dollars. The following discussion of costs and expenses excludes the effect of currency translation. The Americas costs and expenses of $9.4 million decreased $1.3 million primarily due to lower sales and the impact of foreign currency remeasurement. EMEA costs and expenses of $11.5 million decreased by $2.1 million primarily due to lower sales-related costs and bad debt expenses. Asia-Pacific costs and expenses of $9.6 million decreased $1.3 million primarily due to a one-time gain on the sale of capital assets.
Other income (expense), net. Other income, net of $0.2 million for the six months ended June 30, 2024 was favorable by $1.5 million when compared to Other expense, net for the six months ended June 30, 2023 of $1.3 million. The favorable movement was due to higher interest income earned on cash balances in certain international jurisdictions and lower interest expense from reduced debt balances for the six months ended June 30, 2024.
Income taxes. Income taxes for the six months ended June 30, 2024 and 2023 were $4.0 million and $13.9 million based on pre-tax income of $23.0 million and $55.8 million, respectively. The tax rate for the six months ended June 30, 2024 and 2023 was 18% and 25%, respectively. The effective tax rate for the six months ended June 30, 2024 was lower than the effective tax rate for the same period in 2023 mainly due to an increase in excess tax benefits on share-based compensation in relation to overall lower pre-tax book income as well as other discrete benefits recorded as a result of amending prior year federal tax returns.
Net income. As a result of the preceding items, net income for the six months ended June 30, 2024 was $19.0 million, compared to $41.9 million for 2023. Excluding the effect of currency translation, net income decreased $22.9 million as summarized in the following
22
table. The decrease in net income was due to decreases in operating income described above, partially offset by higher interest income, lower interest expense, and lower tax expense:
|
|
Six Months Ended June 30, |
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
||||||
(Thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
Due to |
|
|
Excluding |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
Currency |
|
|
% |
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Translation |
|
|
Translation |
|
|
Change |
|
|
||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
PLP-USA |
|
$ |
8,661 |
|
|
$ |
31,683 |
|
|
$ |
(23,022 |
) |
|
$ |
— |
|
|
$ |
(23,022 |
) |
|
|
(73 |
) |
% |
The Americas |
|
|
2,693 |
|
|
|
4,639 |
|
|
|
(1,946 |
) |
|
|
(5 |
) |
|
|
(1,941 |
) |
|
|
(42 |
) |
|
EMEA |
|
|
4,555 |
|
|
|
3,537 |
|
|
|
1,018 |
|
|
|
76 |
|
|
|
942 |
|
|
|
27 |
|
|
Asia-Pacific |
|
|
3,053 |
|
|
|
2,011 |
|
|
|
1,042 |
|
|
|
(114 |
) |
|
|
1,156 |
|
|
|
57 |
|
|
Consolidated |
|
$ |
18,962 |
|
|
$ |
41,870 |
|
|
$ |
(22,908 |
) |
|
$ |
(43 |
) |
|
$ |
(22,865 |
) |
|
|
(55 |
) |
% |
APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our critical accounting policies are consistent with the information set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Form 10-K for the year ended December 31, 2023 filed on March 8, 2024 with the Securities and Exchange Commission and are, therefore, not presented herein.
WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES
Management Assessment of Liquidity
We measure liquidity on the basis of our ability to meet short-term and long-term operating needs, repay debt, fund additional investments, including acquisitions, and make dividend payments to shareholders. Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, cash dividends, business acquisitions and access to bank lines of credit.
Our investments include expenditures required for equipment and facilities as well as expenditures in support of our strategic initiatives. During the first six months of 2024, we used cash of $7.6 million for capital expenditures. We ended the first six months of 2024 with $47.4 million of cash, cash equivalents and restricted cash (collectively, “Cash”). Our Cash is held in various locations throughout the world. At June 30, 2024, the majority of our Cash was held outside the U.S. We expect most accumulated non-U.S. Cash balances will remain outside of the U.S. and that we will meet U.S. liquidity needs through future operating cash flows, use of U.S. Cash balances, external borrowings, or some combination of these sources. We complete comprehensive reviews of our significant customers and their creditworthiness by analyzing financial statements for customers where we have identified a measure of increased risk. We closely monitor payments and developments which may signal possible customer credit issues. We currently have not identified any potential material impact on our liquidity from customer credit issues.
Total debt, including notes payable, at June 30, 2024 was $38.6 million. At June 30, 2024, our unused availability under our credit facility (the "Facility") was $73.6 million and our bank debt to equity percentage was 9.2%. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability. At June 30, 2024, the Company was in compliance with these covenants.
Our Asia-Pacific segment had $0.1 million and $0.2 million in restricted cash for the periods ended June 30, 2024 and December 31, 2023, respectively. The restricted cash was used to secure bank guarantees and is included in Cash, cash equivalents and restricted cash on the Consolidated Balance Sheets.
On January 19, 2021, the Company received funding for a term loan from PNC Equipment Finance, LLC in the principal amount of $20.5 million for the full amount of the purchase price for a new corporate aircraft. The term of the loan is 120 months at a fixed interest rate of 2.744%. The loan is payable in 119 equal monthly installments, which commenced on March 1, 2021 with a final payment of any outstanding principal and accrued interest due and payable on the final monthly payment date. Of the $13.7 million outstanding on this debt facility at June 30, 2024, $2.1 million was classified as current. The loan is secured by the aircraft.
We expect that our major source of funding for 2024 and beyond will be our operating cash flows, our existing Cash as well as our Facility agreement. Except for current earnings in certain jurisdictions, our operating income is deemed to be indefinitely reinvested in foreign jurisdictions. We currently do not intend nor foresee a need to repatriate these funds. We believe our future operating cash flows will be more than sufficient to cover debt repayments, other contractual obligations, capital expenditures and dividends for the next 12 months and thereafter for the foreseeable future. In addition, we believe our borrowing capacity provides substantial financial resources, if needed, to supplement funding of capital expenditures and/or acquisitions. We also believe that we can further expand our borrowing capacity, if necessary; however, we do not believe we would increase our debt to a level that would have a material adverse impact upon results of operations or financial condition.
23
Sources and Uses of Cash
Net cash provided by operating activities for the six months ended June 30, 2024 was $34.0 million compared to $45.9 million in the comparable prior year six-month period. The $11.9 million decrease was primarily a result of a decrease in net income and larger payables balances, which outpaced increases in current assets, primarily accounts receivable, inventory and prepaid expenses.
Net cash used in investing activities for the six months ended June 30, 2024 was $4.3 million compared to $29.1 million in the comparable prior year six-month period. The $24.8 million change was primarily a result of decreases in acquisition activity and capital expenditures during the current period.
Net cash used in financing activities for the six months ended June 30, 2024 was $33.5 million compared to $11.7 million in the comparable prior year six-month period. The $21.8 million change was primarily the result of increased net payments of long-term debt.
We have commitments under operating leases primarily for office and manufacturing space, transportation equipment, office and computer equipment and finance leases primarily for equipment. At June 30, 2024, we had $1.6 million of current operating lease liabilities and $7.0 million of noncurrent operating lease liabilities. Total liabilities related to finance lease obligations were less than $0.7 million at June 30, 2024.
As of June 30, 2024, the Company had total outstanding guarantees of $12.9 million. Additionally, certain domestic and foreign customers require the Company to issue letters of credit or performance bonds as a condition of placing an order. As of June 30, 2024, the Company had total outstanding letters of credit of $0.9 million.
The Company has borrowing facilities at certain of its foreign subsidiaries, which consist of overdraft lines, working capital credit lines, and facilities for the issuance of letters of credit and short-term borrowing needs. At June 30, 2024, and December 31, 2023, $8.5 million and $13.3 million was outstanding, of which $7.7 million and $11.4 million were classified as current, respectively. These facilities support commitments made in the ordinary course of business.
FORWARD LOOKING STATEMENTS
Cautionary Statement for “Safe Harbor” Purposes Under The Private Securities Litigation Reform Act of 1995
This Form 10-Q and other documents we file with the SEC contain forward-looking statements regarding the Company’s and management’s beliefs and expectations. Any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. As a general matter, forward-looking statements are those focused upon future plans, objectives or performance (as opposed to historical items) and include statements of anticipated events or trends and expectations and beliefs relating to matters not historical in nature. Use of words such “anticipates,” “believes,” “may,” “should,” “will,” “would,” “could,” “plans,” “projects,” “expects,” “estimates,” “predicts,” “targets,” “forecasts,” “intends,” “contemplates,” and similar words may identify forward-looking statements. Such forward-looking statements are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the Company’s control. Such uncertainties and factors could cause the Company’s actual results to differ materially from those matters expressed in or implied by such forward-looking statements.
The following factors, among others, could affect the Company’s future performance and cause the Company’s actual results to differ materially from those expressed or implied by forward-looking statements made in this report:
24
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company operates manufacturing facilities and offices around the world and uses fixed and floating rate debt to finance the Company’s global operations. As a result, the Company is subject to business risks inherent in non-U.S. activities, including political and economic uncertainty, import and export limitations and market risk related to changes in interest rates and foreign currency exchange rates. The Company believes that the political and economic risks related to the Company’s international operations are mitigated due to the geographic diversity in which the Company’s international operations are located.
There have been no material changes in the Company’s exposure to market risk since December 31, 2023. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s Principal Executive Officer and Principal Accounting Officer have concluded that the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended, were effective as of June 30, 2024.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Securities and Exchange Act of 1934, as amended, during the six-month period ended June 30, 2024 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
25
ITEM 1. LEGAL PROCEEDINGS
Information regarding the Company’s current legal proceedings is presented in Note 5 of the Notes to the Consolidated Financial Statements.
ITEM 1A. RISK FACTORS
There were no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 8, 2024. In addition, the ongoing conflicts between Russia and Ukraine as well as Israel and Palestine could potentially exacerbate other risks discussed, any of which could have a material adverse effect on the Company. The situation continues to change, and additional impacts may arise that the Company is not aware of currently.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On November 1, 2023, the Board of Directors authorized a new plan to repurchase up to an additional 212,952 of Preformed Line Products Company common shares, resulting in a total of 250,000 shares available for repurchase with no expiration date. The following table reflects repurchases for the three-month period ended June 30, 2024.
Period |
|
Total |
|
|
Average |
|
|
Total Number of |
|
|
Maximum Number |
|
||||
April |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
204,119 |
|
May |
|
|
4,540 |
|
|
$ |
125.04 |
|
|
|
4,540 |
|
|
|
199,579 |
|
June |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
199,579 |
|
Total |
|
|
4,540 |
|
|
|
|
|
|
|
|
|
|
|||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
26
Item 6. Exhibits and Financial Statement Schedules
Exhibit Number |
|
Exhibit |
|
|
|
31.1 |
|
|
|
|
|
31.2 |
|
|
|
|
|
32.1 |
|
|
|
|
|
32.2 |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document. |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document. |
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the inline XBRL document) |
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
Preformed Line Products Company |
|
|
|
August 1, 2024 |
|
/s/ Robert G. Ruhlman |
|
|
Robert G. Ruhlman |
|
|
Executive Chairman |
|
|
(principal executive officer) |
|
|
|
August 1, 2024 |
|
/s/ Andrew S. Klaus |
|
|
Andrew S. Klaus |
|
|
Chief Financial Officer |
|
|
(principal financial and accounting officer) |
28